Major Changes to El Salvador’s Bitcoin Law

BLP - On January 30, 2024, Legislative Decree No. 199 was published in the Official Gazette, introducing amendments to the Bitcoin Law (the "Reform"). 

The primary goal of the Reform is to enhance Bitcoin’s implementation in response to the people’s needs. 

The most significant amendments include: 
 

• Legal Tender Status: References to Bitcoin as a legal tender have been deleted, rendering its use optional.  
• Voluntary Acceptance: Previously, businesses were required to accept Bitcoin as a means of payment. Under the Reform, Bitcoin has become a voluntary payment method. In other words, although its unrestricted and unlimited use as a medium of exchange is maintained, economic agents will no longer be obligated to accept it. 
• State Obligations: The State’s monetary obligations must be settled in the currency for which they were contracted, prohibiting the use of Bitcoin for payments in contravention of a stipulated currency. 
• Repealed Provisions: Articles 4, 8, and 9 have been repealed, removing the State’s obligation to provide mechanisms for Bitcoin transactions, such as automatic and instant convertibility to U.S. dollars. Similarly, the State is no longer allowed to accept tax payments in Bitcoin.